Tuesday, November 27, 2012

Topic 18 – Site Payments in Phase 4 Clinical Trials

(Full Disclosure – I was introduced to this issue by my client who has a interest in the solution to the problem but regardless I believe this to be a real problem. )

As P4 clinical trials grow larger and more complex, the challenge of site payment computation and accrual grows as an issue.

As more and more sites become sophisticated partners in clinical trials they are demanding customized contracts with payment terms associated with their work and cash flow needs.  It is hard to blame them when pharma and CROs has been so bad about paying, many times paying sites over 90 days after the site incurs the cost and paying inaccurately.

Payments are a source of friction with PIs and thus KOLs.

CenterWatch has identified late payments as the #1 site concern about pharma for the last three years. For a P4 study, Principle Investigators (PIs) are often key opinion leaders (KOLs), since many of KOLs have access to the type of patients needed for the trial.  Developing a strong scientific dialog with KOLs is a fundamental role of MA.  Yet, at the same time we are working so hard to establish a positive working environment to collaborate with KOLs, we are also degrading that relationship due to late or inaccurate study payments.

It is not at all unusual for an MSL to receive complaints about late payments on trials, even though the company has outsourced the trial to a CRO for payments.  The PIs will hold the company responsible despite the CRO’s involvement.

Payments are a source of regulatory risk.

Since payments are generally computed manually even by most CROs, many mistakes are made.  Thus at the end of each study there is a process called “End of Trial Reconciliation” when the actual amounts owed are computed against the final data collected.  Any missing money (and there is often hundreds of thousands in overdue money) is paid at this point.

BUT, the regulatory risk is not in delayed payment.  The regulatory risk is what happens if we find we have paid too much.  This happens often in clinical trials because due patients drop out but due to computational errors the site still receives payments for that patient.  If that occurs we have overpaid the site and the PI (which we discussed are also KOLs).  But this computation error may be from years before.

Now the quandary is – do we demand repayment from the site for our error.  Technically, the site should refund the overpayment.  But, I would ask your operations group if you have ever asked for that money back.  My practical experience is that the overpayments are rarely if ever collected back.  If they are not collected back, we have essentially paid more for the trial than fair market value and thus we have a potential compliance issues.

While this issue has not been one I have seen enforced to date, given the growing scrutiny on all payments to physicians with the Sunshine Act, I think it would be wise to ensure that this risk is avoided.

Payment computation is a hidden cost. 

With these more sophisticated contracts comes the need to administer them and compute payments.  Sites don’t send an invoice.  So, determining the amount to pay is left up completely to the pharma company.  Performing that computation can be complex and time consuming.

Since many pharma companies outsource their P4 trials, what they are doing is paying the CRO to perform this computation for them.  In some larger P4 trials, hundreds of thousands of dollars in fees are spent for the CRO to compute and issue payments.

New solutions are available.

The good news is that a new type of software is being developed to automate the payment process and avoid the need to do any manual calculations.  If you are interested check them out .  My client is www.clinverse.com.  Also their competitor is www.greenphire.com.

What has been your experience with P4 site payments?  Leave your thoughts in the comments.

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